Please answer the questions in the "problems" document.

Week 2 23-20 (Objectives 23-3, 23-4) The following are misstatements that might be found in the client's year-end cash balance (assume that the balance sheet date is June 30): 1. The outstanding checks on the June 30 bank reconciliation were underfooted by $2,000. 2. A loan from the bank on June 26 was credited directly to the client's bank account. The loan was not entered as of June 30. 3. A check was omitted from the outstanding check list on the June 30 bank reconciliation. It cleared the bank July 7. 4. A check was omitted from the outstanding check list on the bank reconciliation. It cleared the bank September 6. 5. Cash receipts collected on accounts receivable from July 1 to July 5 were included as June 29 and 30 cash receipts. 6. A bank transfer recorded in the accounting records on July 1 was included as a deposit in transit on June 30. 7. A check that was dated June 26 and disbursed in June was not recorded in the cash disbursements journal, but it was included as an outstanding check on June 30. Required a. Assuming that each of these misstatements was intentional (fraud), state the most likely motivation of the person responsible. b. What control can be instituted for each fraud to reduce the likelihood of occurrence? c. List an audit procedure that can be used to discover each fraud. 14-23 (Objectives 14-1, 14-3) The following questions deal with audit evidence for the sales and collection cycle. Choose the best response. a. An auditor is performing substantive tests of transactions for sales. One step is to trace a sample of debit entries from the accounts receivable master file back to the supporting duplicate sales invoices. What will the auditor intend to establish by this step? (1)Sales invoices represent existing sales. (2)All sales have been recorded. (3)All sales invoices have been correctly posted to customer accounts. (4)Debit entries in the accounts receivable master file are correctly supported by sales invoices. b. Which audit procedure is most effective in testing credit sales for overstatement? (1)Trace a sample of postings from the sales journal to the sales account in the general ledger. (2)Vouch a sample of recorded sales from the sales journal to shipping documents. (3)Prepare an aging of accounts receivable. (4)Trace a sample of initial sales orders to sales recorded in the sales journal. c. To determine whether internal control relative to the revenue cycle of a wholesaling entity is operating effectively in minimizing the failure to prepare sales invoices, an auditor would most likely select a sample of transactions from the population represented by the (1)sales order file. (2)customer order file. (3)shipping document file. (4)sales invoice file. Week 3 20-20 (Objectives 20-2, 20-3) Following are some of the tests of controls and substantive tests of transactions procedures often performed in the payroll and personnel cycle. (Each procedure is to be done on a sample basis or using audit software.) 1. Reconcile the monthly payroll total for direct manufacturing labor with the labor cost distribution. 2. Examine the time card for the approval of a foreman. 3. Recompute hours on the time card and compare the total with the total hours for which the employee has been paid. 4. Perform a surprise payroll payoff and observe employees picking up and signing for their checks. 5. Compare the employee name, date, check number, and amounts on cancelled checks with the payroll journal. 6. Trace the hours from the employee time cards to job tickets to make sure that the total reconciles, and trace each job ticket to the jobcost record. 7. Use audit software to account for the sequence of payroll checks in the payroll journal. Required a. Identify whether each of the procedures is primarily a test of control or a substantive test of transactions. b. Identify the transaction-related audit objective(s) of each of the procedures. 21-21 (Objectives 21-1, 21-3, 21-5, 21-6, 21-7) The Frist Corporation has the following internal controls related to inventory: 1. Only authorized inventory warehousing personnel are allowed in inventory storage areas. 2. All inventory products are stored in warehousing areas that are segregated from other storage areas used to house equipment and supplies. 3. All inventory held on consignment at Frist Corporation is stored in a separate area of the warehouse. 4. The inventory purchasing system only allows purchases from preapproved vendors. 5. The perpetual inventory system tracks the average number of days each inventory product number has been in the warehouse. 6. Microchips are embedded in each product and when inventory items are removed from the warehouse to shipping, radio-frequencies signal a deduction of inventory to the perpetual inventory system. 7. On a weekly basis, inventory accounting personnel take samples of inventory products selected from the perpetual inventory system and verify that the inventory is on-hand in the warehouse and that the quantities in the listing are correct. 8. On a weekly basis, inventory accounting personnel select inventory items on hand in the warehouse and verify that the item is included in the perpetual inventory listing at the correct amount. 9. The perpetual inventory system subtotals the quantity of inventory in the system and interfaces with the general ledger system on a daily basis to ensure quantities agree. 10. The perpetual inventory system will not accept inventory additions without the recording on a valid receiving report. For each of the internal controls: Required a. Identify the related transaction-related audit objective(s) affected by the control. b. Describe risks the control is designed to mitigate. c. Design a test of control to determine if the control is operating effectively. Week 4 18-26 (Objectives 18-3, 18-4) In testing cash disbursements for the Jay Klein Company, you obtained an understanding of internal control. The controls are reasonably good, and no unusual audit problems arose in previous years. Although there are not many individuals in the accounting department, there is a reasonable separation of duties in the organization. There is a separate purchasing agent who is responsible for ordering goods and a separate receiving department that counts the goods when they are received and prepares receiving reports. There is a separation of duties between recording acquisitions and cash disbursements, and all information is recorded in the two journals independently. The controller reviews all supporting documents before signing the checks, and he immediately mails the checks to the vendors. Check copies are used for subsequent recording. All aspects of internal control seem satisfactory to you, and you perform minimum tests of 25 transactions as a means of assessing control risk. In your tests, you discover the following exceptions: 1. One invoice was paid twice. The second payment was supported by a duplicate copy of the invoice. Both copies of the invoice were marked \"paid.\" 2. Two items in the acquisitions journal were misclassified. 3. Three invoices were not initialed by the controller, but there were no dollar misstatements evident in the transactions. 4. Five receiving reports were recorded in the acquisitions journal at least 2 weeks later than their date on the receiving report. 5. Two receiving reports for vendors' invoices were missing from the transaction packets. One vendor's invoice had an extension error, and the invoice was initialed that the amount had been checked. 6. One check amount in the cash disbursements journal was for $100 less than the amount stated on the vendor's invoice. 7. One voided check was missing. Required a. Identify whether each of 1 through 7 is a control test deviation, a monetary misstatement, or both. b. For each exception, identify which transaction-related audit objective was not met. c. What is the audit importance of each of these exceptions? d. What follow-up procedures would you use to determine more about the nature of each exception? e. How would each of these exceptions affect rest of the your audit? Be specific. f. Identify internal controls that should have prevented each misstatement